I am starting a negative view on this firm (formerly named Zaino bags) and I have mentioned this firm on the blog before on they cash sucking abilities given the following:
- They make luggages and bagpacks and is based in China, Fujian
- 9 June 2011 - 1 for 4 rights at $0.08 per share, 43% discount to market price of $0.14 to raise RMB 100m despite their cash hoard
- Major shareholder has 51.5% stake
- Super normal profit margins and return on investments, both in high 20+% when average is 5-10%/ <15% ROI
- Additional expenses from opening 500 new stores (RMB 230m) and prepaid rental (RMB 160m)are depreciated/amortized on a 5/2 year basis straight line. Seems odd that prepaid rental is amortised and depreciation of stores is over 5 years and why the sudden 500 stores?. (Massaging figures)
- May 2010 - raised S$11.8m in new share placement of which S$2.5m or 21% was spent on exploring secondary listing opportunities - which failed subsequently.
- This was when firm has cash of RMB 552m and debt of RMB 24m
- Interest earned on cash is sub 0.1% when China interest rate is much higher
- 2010 dividend paid out was about S$10m
- (Whats going on??)
- Net cash of RMB 504m or $0.0965 per share vs. NAV of $0.37 per share (Too cheap to be good)
- Firm paid dividend per share of RMB 0.088 / 0.063 in 2009 and 2010and committed to pay only 10% of profits
6 comments:
Hi,
I did 2 posts on dapai as well.
good to see another person doing an analysis of this counter.
cheers!
Smell a rat, usage of funds does not add up. RED FLAG!
Hi what do you think about Changtian Plastic & Chemical Ltd. Is it similar to Dapai?
I would think it is similar. Several red flags have been up. More importantly there have been institutional weakness on that part.
When you invest, your primary goal is to eventually sell what you bought (company shares, mutual funds, ETF, etc.) at a higher price than you paid. Basically, you are looking to make money with your investment.
Singapore dividend stock
Nice going
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